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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11823
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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LT16 quarterly taxes from 2003 and 2004. It there a 10 year

Customer Question

LT16 quarterly taxes from 2003 and 2004. It there a 10 year limitations on collecting. This was from a business I had then. I now operate under a new business and it is incorp
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
I have now received a tax levy on my bank account which is operating for my currect business.
Customer: replied 1 year ago.
The taxes are employee quarterly for the years 2003 and 2004
Customer: replied 1 year ago.
Posted by JustAnswer at customer's request) Hello. I would like to request the following Expert Service(s) from you: Live Phone Call. Let me know if you need more information, or send me the service offer(s) so we can proceed.
Customer: replied 1 year ago.
I do not need a live call if I receive my options asap
Expert:  Lane replied 1 year ago.

Hi.

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I hold a JD (Juris Doctorate, a doctoral degree in the law), concentration in Tax Law & Corporate law, an MBA (specialization in finance & tax), and BBA from Mercer University's Stetson School of Business and Economics, as well as CFP and CRPS designations. … I can help here

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This is known as the trust fund recovery penalty. The amount of the penalty is equal to the amount of money deducted from employees paychecks but not paid to the IRS. (And of course interest applies as well.)

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The IRS timeframe for assessment of the trust fund recovery penalty against you is based on the filing date of your company’s employment tax returns (Form 941).

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They have three years from the filing date of the employment tax returns to come to you with the trust fund penalty.

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Now, the term “filing date” is important here – defined by IRC § 6501(b)(2), and itnsays employment tax returns filed for any period ending within a calendar year are considered filed on April 15 of the succeeding year.

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SO that's the toime period for filing the assessment....(assessing the tax ... establishin an amoun that's owed)

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So if you filed late ... then the 2003 three year clock started in 2004, which means that they may not have assessed until 2007.

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Then the period for COLLECT, statute to COLLECT the tax is ten years ... which would be 2017.

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Hope this helps.

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Expert:  Lane replied 1 year ago.

Further, If Form 941 was never filed then per 26 U.S.C. §6020(b), the IRS can prepare a Form 941 on behalf of the business and assess the liability. There is no statute of limitations to assess a TFRP against a responsible party if that party never filed an actual Form 941 or if the IRS can prove actual fraud! This is because a responsible individual is subject to same statute of limitations period as that is applicable to the employer’s return.

Expert:  Lane replied 1 year ago.

Finally, here's the IRS guidance on the LT16 itself

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https://www.irs.gov/Individuals/Understanding-your-LT16-Notice

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Let me know if you have questions

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Lane

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Customer: replied 1 year ago.
Form 941 was filed but not paid I believe. What can I do asap? Contact them to set up payments or what options do I have
Expert:  Lane replied 1 year ago.

Yes, the LT 16 is that request that you DO contact them.

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See this from IRS:

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Understanding your LT16 Notice

We may take enforcement action to collect taxes you owe because you have not responded to previous notices we sent you on this matter. We need to hear from you about your overdue taxes or tax returns.

What you need to do

  • Pay the amount you owe within 10 days from the date of the letter.
  • File any missing tax returns and send payment for any tax due within 10 days from the date of the letter.
  • If you’ve already paid the balance, call the telephone number listed on the letter.
  • If you’ve already filed the returns, call the telephone number on the letter.
  • If you don’t think you owe the balance due or are required to file a return, call the telephone number listed on the letter.
  • If you can’t pay the balance, call the telephone number listed on the letter to discuss payment options.
Expert:  Lane replied 1 year ago.

So, as you can see ... every optioin other than pay in full has the phrase "call the telephone number listed on the letter."

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Calling the number is ***** way to "srop the locomotive" here and work something out.

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If you can't pay everything, they may set up an installment agreement for you

Expert:  Lane replied 1 year ago.

Since you're what's called a "responsible person" from the old business they can't (if you done things right with the new business, such as keeping assets of the corporation separate, and operate under the corporation laws of your state) attach the new corporations assets.

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So this is just about you... and if you can't personally afford, they may be willing to work something out for you.

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But again, as you can see you MUST call.

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My recommendation is to call early and be prepared to wait 30 plus minuts to get through ... but the minute you do, you'll be glad you did ... In my experrience people wo do call them end up much bette of in the long haul than those that just stick their head in the sand.

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The main thing you want to impress upon them is that this wasn't fraud (meaning it wasn't intentional).

Expert:  Lane replied 1 year ago.

I hope this has helped.

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If this HAS helped, (and you don't have any other questions on this), I'd really appreciate a positive rating (using those stars on your screen) … That's the only way I'll be credited with a portion of what you've paid JustAnswer.com

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Thank you,

Lane

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Customer: replied 1 year ago.
I understand you have 3years for personal taxes but the 3 years also refers to federal employees taxes ? I did not know you have 3 years from each to file and them the 10 years starts ???
Expert:  Lane replied 1 year ago.

it's the same statute, IRS has three years to assess.

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The trust fund recovery penalty is authorized by Sec. 6672 of the Internal Revenue Code (IRC).

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Also' note that this is called a trust fund because of the effective trust that's created for withholdiong EMPLOYEES' SS & Medicare.

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There's also the non-trust fund piece. Non-trust fund taxes are the employer's required matching to the employees' social security medicare pay-in. Becasue These contributions are made from the business' own funds rather than deducted from employee paychecks, there's is no personal liability for non-trust fund withholdings ... they can only be collected from the business.

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And remember, if the form 941 was never filed then per 26 U.S.C. §6020(b), the IRS can prepare a Form 941 on behalf of the business and assess the liability. There is no statute of limitations to assess a TFRP against a responsible party if that party never filed an actual Form 941 or if the IRS can prove actual fraud.

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Expert:  Lane replied 1 year ago.

But yes, once the taxes gave been assessed (three year statute if you file, NO limitation if you didn't file)

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THEN the 10 year period starts

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One Enrolled Agent (Alia Nikolakopulos) puts it this way:

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When a company has been assessed with delinquent payroll taxes, the IRS has 10 years to collect what is owed under the collection statute. The standard expiration date of the statute is 10 years from the date the return is filed showing the balance, or 10 years from the date the IRS files a return on behalf of the company, which can occur if the business fails to file a return on its own. The IRS uses the most recent of these events to calculate the expiration date of the statute, so if the IRS files a return on behalf of the company and the company later files its own return showing a balance, the collection statute starts over as of the date of the company-filed return.

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Lane

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If this HAS helped, (and you don't have any other questions on this), I'd really appreciate a positive rating (using those stars on your screen) … That's the only way I'll be credited with a portion of what you've paid JustAnswer.com

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Thank you,

Lane

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Customer: replied 1 year ago.
If this was in uncollectanle status what happened that triggered this to become active and enforceable ?
Expert:  Lane replied 1 year ago.

It all depends on when the assessment was made ... AND on whether they think this was willful.

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Again if they did not assess until right at the end of the statute for assessing (ASED) ... (which wouldd be 2006 for the 2003 debt and 2007 for the 2004 debt) then the 10 year CSED on tax would not be up until 2016 and 2017 respectively.

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The two things thhat you need to pin down is the (1) the acual assesment date and (2) whether they think this was willful (where there's NO statute)

Customer: replied 1 year ago.
At the time of this I lost the building to the bank( foreclosure) and then was renting a much smaller building with no employees -in 2010 started a rent to own set up and 2 years ago incorporated and received a liquor license -currently have no employees-however I believe I did not change my Ssn number to the fed I d on my checking account
Expert:  Lane replied 1 year ago.

Looks llike our posts crossed there let me read

Customer: replied 1 year ago.
my business is incorp but my checking account in the business name has my Ssn on so I am assuming that is how they were able to find it ???
Expert:  Lane replied 1 year ago.

Yes, very likely ... again the trust fund part of this ...the part of the SS & Medicare that was withheld from the checks of others is a personal liiabiity for the "responsible party," so your having money in that personal bank account makes it attachable

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So sorry ... hopefully haing all the facts will hellp you here

Expert:  Lane replied 1 year ago.

Still with me? ... other questions?

Expert:  Lane replied 1 year ago.

One last point ... my get tells me here that if you call, explain that you were up against the wall financially and that you didn'' do this willfully, but that you just didn't know WHAT to do becasue you didn't have the funds (after some of the other things that happend - losing the bldg, etc) they will likely work with you.

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If you continue not to respond, they''ll just levy any personal assets thay can find.

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Again, I hope you'll rate me positively, using the stars on your screen … (that's the only way we get credit for the work here) … based on thoroughness and accuracy, rather than any good news/bad news content ... Hopefully, having all the facts will help you "see around some corners." ... Otherwise JA just keeps it all

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If you'd like, I can make an offer (will do for tthe smallest amount possible, $5) to talk this through on the phone

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Otherwise would appreciate a rating by using those stars

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Thank you,

Lane

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Expert:  Lane replied 1 year ago.

Did you see my answer to your second question?

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I'll go ahead and make the offer, so you'll have that if you'd like to discuss confidentially over the phone

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But if you don't need morre here, Id appreciate your positive rating usinmg the stars on your screen ... that's the only way Justnswer with credit me with a PORTION of what you've paid.

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Thank you,

Lane

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Expert:  Lane replied 1 year ago.

Did you see my answer.?

Lane